A sustained trade above 11,060-11,100 can trigger short-covering rally taking the Index to levels of 11,400-11,470.
The Nifty50 continued to drift lower for the sixth trading session in a row, engulfing more than 50 percent of the gigantic upsurge that we had witnessed on September 20 and 23.
Following this gradual correction spread over the next two weeks, the index is approaching crucial support levels between 11,100-11,060 being a cluster of previous swing highs and lows along with the key 61.8 percent Fibonacci retracement level.
A sustained trade above 11,060-11,100 can trigger a short-covering rally taking the Index to levels of 11,400-11,470. On the flip side, the breakdown from this cluster of support areas will extend the correction to levels of 10,900-10,870.
Here is a list of top three stocks which could give 5-14 percent return in the next three-four weeks:
Britannia Industries Ltd: Buy| LTP: Rs 2,952| Target: Rs 3,100-3,250| Stop Loss: Rs 2,840| Upside 5-10 percent
The stock has formed a bullish candlestick pattern after taking support at the 20-EMA on the daily chart which also happened to be the GAP area which was formed on September 23.
Further, the bull candle was backed by healthy volume activity suggesting renewed buying interest.
A sustained trade above Rs 2,970 will take the stock higher towards levels of Rs 3,100-3,250. The RSI has also turned north after taking support at the 50-level confirming bullishness.
The stock may be bought in the range of Rs 2,940-2,960 for targets of Rs 3,100-3,250, and keep a stop loss below Rs 2,840.
City Union Bank Ltd: Buy| LTP: Rs 221| Target: Rs 235-250| Stop Loss: Rs 210| Upside 6-13 percent
The stock is trading back above the trendline resistance after a throwback to test 50 percent Fibonacci retracement level placed at Rs 206, suggesting bullishness.
Further, on the weekly chart, it is in a strong uptrend making higher highs and higher lows and all intermediate corrections halt at the 50-WEMA following which makes a new high.
Technical indicators are also favoring the bulls indicating extended bullishness. The stock may be bought in the range of Rs 220-225 for targets of 235-250, and keep a stop loss below Rs 210.
UPL Ltd: Sell| LTP: Rs 581| Target: Rs 536-550| Stop Loss: Rs 605| Downside 8-14 percent
The stock is on the verge of a breakdown from the rising channel support line placed at Rs 568. Further, the recent pullback rally halted at the critical resistance of 61.8 percent Fibonacci retracement level triggering the start of its downtrend. Moreover, the stock has started its final leg of corrective wave 5 suggesting a lower low may be seen in the coming weeks. Further, RSI has turned lower from the 50-level which is favouring the bears.
The stock may be sold in the range of Rs 585-575 for the target of Rs 536-500, and keep a stop loss above Rs 605.
(The author is Senior Technical Analyst - Institutional Equities, YES Securities Ltd)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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